> I have argued the AI boom has many of the hallmarks of a bubble but will keep inflating until interest rates get to prohibitive levels. My research now suggests the marker to watch is the yield on 10-year US Treasury bonds, the global benchmark for long-term borrowing costs, which is now at 4.8 per cent. When it decisively breaches 5 per cent, the upper end of its range since the dotcom period, the AI bubble could pop.

> This breach would signal the start of a new era of tighter money, in which AI mega projects will be harder to fund. When Big Tech must compete for capital with a government paying a yield of more than 5 per cent on bonds — which matches an inflation expectations-adjusted return of over 2.5 per cent — many will find themselves crowded out of the debt markets, with serious consequences.

So the longevity of the AI bubble depends on the speed at which demand for US Treasuries declines, pushing up yields.

Foreign treasuries investors have the opportunity to do something hilarious: sell off your treasuries, pop the AI capital bubble and deflate US big tech valuations.